Experts warn a new wave of store closures could be in sight for the UK (Image: Getty)
Labour has been accused of “killing the high street” amid warnings Britain could face a fresh wave of shop closures as struggling businesses battle soaring tax bills and rising costs.
Retail experts say changes to business rates and mounting financial pressure could push more shops, pubs and restaurants over the edge, with fears that town centres already scarred by empty units may deteriorate further.
Business rates, a tax paid on commercial properties including shops, pubs and offices, currently raise around £28.8billion a year for local government services. But critics argue the system unfairly punishes traditional high street businesses that rely on physical premises while benefiting online giants with large warehouse operations.
changes to business rates and mounting financial pressure could push more shops out of business (Image: Getty)
The warnings come in a parliamentary research briefing produced by Professor Ben Lockwood, Programme Director at the Centre for Business Taxation at the University of Oxford, and Dr Eddy Tam of King’s College London.
Under reforms introduced in April 2026, Labour replaced major relief schemes with a new tiered system based on property values. The government says the changes will reduce rates bills for more than 750,000 properties by a combined £900million.
However, business groups and opposition figures warn many firms are already struggling after years of rising costs, inflation and reduced relief support.
Retail, hospitality and leisure relief had previously offered discounts of up to 75% during the pandemic recovery period, before falling to 40% in 2025/26.
Experts say the constant changes have created uncertainty for businesses already operating on razor-thin margins.
Research cited in a parliamentary briefing found that business rates can have a major effect on whether shops survive. One study concluded that a 1% increase in business rates reduced employment at manufacturing firms by around 1%, while another found that lowering rates significantly reduced vacancy levels on high streets.
The same research found that a 1 percentage point reduction in the tax rate cut vacancy rates by around 5%, suggesting relief schemes had a dramatic impact on keeping shops occupied.
Retail analysts fear the reverse could now happen if businesses face higher bills.
A growing number of retailers have already announced closures in recent months as they battle higher National Insurance contributions, wage increases and weaker consumer spending.
Critics say Britain’s high streets are at risk of becoming dominated by vape shops, betting shops and empty storefronts unless more support is offered to independent retailers.
The UK already has one of the highest property tax burdens in the developed world. According to the parliamentary report, Britain ranks as the third-highest OECD country for the share of government revenue raised through business property taxes.
Professor Ben Lockwood, one of the academics behind the research, said lower rates for smaller retail and hospitality premises could help improve occupancy rates, but warned stability would be key to making reforms work long-term.
Labour insists the overhaul is aimed at creating a fairer system and shifting more of the burden onto larger properties and distribution centres often used by online retailers.
But with fresh closures already looming across the retail sector, campaigners fear many businesses may not survive long enough to see the benefits.